Hi Guys and girls
I thank everybody in last post for your help, it was so helpfull.
My ppor is worth $720
I have a loan on it for $520Incomes are $75 and $56 a year.
Ok what I need to find out is how much is the max I can get a loan of for my first ip.
My loan is with combank and when I talk to them about an ip they keep telling me I will need to pay for LMI no matter how much over 200 I ask for.
I really hate LMI like Im sure many do,I have paid it 2 times in the last 4 years and I'm trying to avoid it this time if I can.
I was thinking that I could get a line of credit off combank for deposit and apply for loan with another bank for the rest.
Can this be done? Is this the best way to structure this loan.
Thank you all in advance for your help
$720,000 x 80% = $576,000
Existing loan is $520,000
So you may be able to set up a LOC for $56,000 = this will keep the LVR to 80% and avoid LMI.
You then use this as deposit and costs for the next one.
Keeping the LVR to 80% on the next one may be hard as the max purchase price would be around $224,000.
This would allow 20% for deposit = $44,800 (from the LOC)
and 5% for costs = $11,200 (from the LOC).
and 80% as a new loan $179,200 (from a different bank, Interest only).Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terry figures are spot on as usual.
One of the advantages in taking the loan elsewhere would mean that LMI is of course only worked on the exposure of the new loan and not the total exposure.
Still the odd lender who is doing NO Lmi to the client on 90% lvr where the application is a purchase so options are varied.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Terryw and Qlds007 First,thank you for you time in trying to help me out.
The properties I'm looking at range from 240 – 270 so it looks like I may have to pay that LMI but from what Qld007 is saying if I get the loan from the new lender I will pay less LMI.
I have talked to another bank about getting a loan from them but they have said I would need to bring a cash deposit to them,hence why I was thinking about getting line of credit from bank I'm with now and getting loan off another bank,but if I need to do that I may be looking at just getting the loan from current bank?
If you guys where to buy a property for 250 with me details above,how would you do it taking in to account I have a loan of 520 with current lender.I suppose its better to pay the LMI and time will get that back with all going well.
Thanks guys
I would suggest you avoid cross collateralising the properties. Keeping them as separate banks will help this. I also suggest to keep a bit of the LOC for extra costs or for emergencies.
LMI sounds costly, but when you look at it over the life of the property it is insignificant. It is also tax deductible.
So if you were to buy a $250k property, I would be included to use a 90% loan with 10% deposit and costs coming from the LOC.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
evernat
As Terry pointed LMI is an opportunity cost and especially where it is charged for investment becomes a deductible loan expense.
Certainly if you can avoid or if the lender pays for it (Yes there a couple of products doing the rounds where this applies) then as long as everything else is equal and the product has all of the features you want then why would you pay over the odd for something that is cheaper elsewhere.
What you have to bear in mind is that LMI premium rates vary from 1 lender to another even where they are using the same mortgage insurer so to save your self a basis point hear or there may not be the best way forward if the LMI premium with that lender is more expensive.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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